The current lockdown will go down in Indian economic, if not national history as one of the most challenging times to be in business. A bold and necessary move to contain and defeat the novel coronavirus; the lockdown has had many intended and un-intended consequences. People and organisational behaviour have changed dramatically, overnight: literally!
Supply chains have been disrupted, fundamental assumptions have been shattered, and in general, there is an atmosphere of fear and uncertainty.
Business cash flows, which were already under strain in a slowing economy, have taken a further hit. Revenues are dwindling or almost dried up, while overheads like salaries have to be paid. ‘Force majeure’ clause is being invoked; yet may not solve the fundamental problem of how to stay afloat till this crisis tides over. Many companies are looking for a payment moratorium.
It is clear that every business is now hunkering down and thinking about ‘what next?’ when the lockdown is lifted.
As a CFO or Treasurer, the best bet is to assume the worst for the next six months, at the least. All your Accounts Receivables metrics are at risk. There is a risk of increasing Days Sales Outstanding, customers asking for extended credit terms and longer collection cycles.
On the other hand, for your team, ‘Work from home’ has created new practical challenges. How does the billing team send invoices and supporting documents to customers, with no courier services? Sales folks are remote, how do they meet customers to urge them to pay on time.
It is time to use this crisis to ‘Go Digital’ with a vengeance. Under the changed circumstances, Customers will be more receptive to accept Digital invoices and scanned supporting documentation. Prepare a clear communication to all stakeholders about the new rules of engagement. Digital despatch of invoices, Digital supporting documents, Digital reminders and Digital dispute resolution is the way forward.
Tracking Receivables at a granular level becomes all the more critical. CFOs now need to have a better visibility of where exactly each invoice is stuck. Digital collaboration between various internal teams also becomes the need of the hour.
How do you achieve this quickly without choking the bandwidth of your already stressed technology team?
Sign-up to SaaS providers like KapittX, who will provide quick, easy-to-use, secure, Cloud Solutions to accelerate your receivables collection.
Stay safe and Emerge Stronger.
Anand Ramchandran Co-Founder and CFO, Kapittx